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Wednesday, August 5, 2015

Do you get the feeling we've got a government that's worrying about everything except getting on with governing? One issue that's not getting the attention it deserves is the rise of "digital disruption".

The pace at which the continuing revolution in information and communications technology is reshaping industries and occupations is remarkable.

As the consultants Deloitte Access Economics wrote in a report for Google, just a few years ago most consumers logged on to the internet to access email, search the web and do some online shopping. Most of us still accessed the internet using a computer.

"Today, digital technology including cloud platforms, smart hand-held devices and social networks are the new beachheads of the sweeping impacts of the internet," the report says.

"Rapidly evolving from basic connectivity, these technologies are further changing not only how consumers interact with businesses, but also how businesses are organising themselves."

We've seen the digital revolution change the way we buy and listen to music, read books, learn the news, shop, do our banking, pay bills and check in on flights. Its changes to the news media and banking and other financial services have a long way to run yet.

The digital revolution is about information in all its forms, how it's gathered, processed, accessed, transferred and stored. "Big data" is about how all this information is analysed to produce further information about how we behave.

This is why you don't have to be very brave to predict that digital-driven change will be affecting many more industries before it's through.

As the consultants say, while reaching new customers and responding to customer needs is a big reason for businesses to go online and to use social media, we're now seeing "transformational change" inside businesses as they take advantage of the efficiencies that advances in digital technology are making possible.

This means "cloud, data analytics and machine-to-machine technologies" emerging as a second big driver of change. (It also means you and me learning to live with a lot of high-sounding words we barely understand.)

And phones are taking over the world. "The rise in mobile access to the internet and digital services through smartphones and connected devices [I think that means iPads] has prompted new ways of thinking about presenting information to consumers on smaller screens and capitalising on usage trends."

Read your newspaper on a phone? Sure. Many people already do, and we're working to improve our offering as we speak.

Hip business people speak of digital disruption as though it's a wonderful thing. It will make the world a better, faster, easier place, so bring it on.

But that word "disruption" sounds more nasty than nice. So which is it to be?

Both. If new inventions take hold and spread it's because enough people really do think they're an improvement.

But that doesn't stop the industries and businesses most affected by the advance from being turned on their head and maybe even forced to close. So the benefits to customers usually come at a cost to many workers.

Some are redeployed, some become redundant. Most ejected workers eventually find a new job – even if it isn't always as good as the one they left – though some, particularly older people, may never get back on their feet.

But how far have we got with the digital revolution to date? Deloitte Access Economics has gathered what we know and done some rough figuring in a report for the Australian Computer Society.

The consultants say that, compared with other developed countries, Australia is a high-level user and adopter of information and communications technology, with comparatively high rates of mobile broadband penetration and business adoption of digital technology for commercial practices.

According to the Organisation for Economic Co-operation and Development, for every 100 people in Oz there are about 114 subscriptions to mobile wireless broadband, more than any other country bar Finland.

Almost three-quarters of our businesses have a website and a very high 38 per cent of businesses actually make sales over the internet.

The OECD says our information technology specialists make up 3.6 per cent of our workforce, which puts us right behind the Nordic countries and North America. Using a broader definition, about 22 per cent of the workforce is in info-technology-intensive occupations.

The consultants' own estimates say about 300,000 info-tech workers are in the industry proper, with about another 300,000 in other professional and scientific service industries, public administration, financial services and various other industries. This amounts to 5 per cent of the workforce.

They estimate that the digital economy contributed almost $80 billion to gross domestic product in 2013-14, well up on their previous estimate in 2011 and about 5 per cent of the total economy.

But they identify two areas of weakness. First, the 10 per cent of our total annual spending on research and development that we devote to information and communications technology is way behind other developed economies, even small ones.

Second, demand for info-tech workers is expected to grow by 100,000 over the next six years, but Australian new graduates with info-tech qualifications have declined significantly since the early noughties.

More than 10,000 temporary skilled migrant 457 visas have been granted annually to info-tech workers in recent years. In 2013-14 it was closer to 20,000.

Really? This is the best we can do by our own young people? Surely we should be trying harder.